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Tuesday, April 19, 2011

ColonialPalooza: Farkas GUILTY on all counts; what it means going forward

Breaking news by Suevon Lee, the Ocala Star-Banner reporter who has been covering this story from Day One:

According to Peter Carr, a spokesman for the U.S. Attorney's Office for the Eastern District of Virgina, the verdict was returned 5 p.m. Tuesday, after a full day and a half of deliberations that began Monday afternoon at the conclusion of a 10-day trial at the federal courthouse here.

A sentencing date is also being set for Farkas, 58, who faces up to 30 years in prison on each count when he appears before U.S. District Judge Leonie M. Brinkema on a future date.

In what prosecutors have described as the “largest and longest running fraud scheme in the country,” Farkas, with the help of several co-conspirators, was accused of selling fake loan assets to Colonial Bank, once one of the country's largest, and diverting funds from a company-owned financing vehicle to help cover Taylor Bean's operating expenses.

In response to comments, emails and tweets:

Farkas’ conviction may or may not have any impact on whether the feds decide to pursue senior officials at Taylor Bean’s partner, Colonial Bank. Colonial officials have already acknowledged that they are the target of an ongoing federal probe into potential banking and securities irregularities.

Also, both Colonial and Taylor Bean are in Chapter 11 Bankruptcy, a process that should result in final liquidation of those two companies’ remaining assets sometime this summer. A great deal of evidence is behind the shield of attorney-client privilege in those cases. In fact, Farkas’ own defense team sought to compel the release of those documents before the trial began, claiming that they could contain information needed for his defense. It’s a fair assumption that these materials will no longer enjoy that privilege once the bankruptcy proceedings have run their course.

Could they be used to advance the ongoing federal probe and result in criminal indictments? Perhaps. There’s also a chance that the evidence could be exculpatory for Farkas, giving him ammunition as his case winds through the appeals process.

There’s still a lot of intrigue left.

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2
comments
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Not at all. Colonial has acknowledged that it is the target of an ongoing federal investigation, and bankruptcy proceedings for both Colonial and Taylor Bean have not concluded yet. A lot of evidence lies behind the shield of attorney-client privilege in those cases. Liquidation of the two companies is expected later this summer and more should be known then.

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